15 October 2008

5 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up Monday. OCT’08LC futures were up $1.875/cwt at $91.000/cwt; $1.600/cwt lower than a week ago. The DEC’08LC contract closed at $93.000/cwt up $1.70/cwt but $1.775/cwt lower than last Monday. Even though a rally in the stock market and late October/December spreading was supportive, fears that hard economic times would slow retail beef demand put pressure on prices. However, lower fed cattle numbers in feedlots was supportive. Technically oversold conditions attracted some buyers. USDA put the Choice Beef cutout at $149.51/cwt, down $0.66/cwt. The 5-area average in Monday’s light trade was placed at $91.32/cwt, $4.73/cwt lower than this time last week. Packers continued to operate at a loss. Margins were raised $22.65/head from last Monday to a negative $6.50/head, according to HedgersEdge.com. This was based on the average buy of $93.15/cwt vs. the average breakeven of $92.69/cwt. It is still a good idea to sell cattle when ready.

FEEDER CATTLE at the CME were gainers on Monday. OCT’08FC futures closed at $96.950/cwt, up $1.500/cwt but $0.725/cwt lower than a week ago. The NOV’08FC contract finished at $96.175/cwt, up $1.125/cwt but $1.625/cwt lower than this time last week. Feeders were supported by live cattle prices. Oversold conditions, short covering, and relieved fears about the sagging economy jump started feeders to limit-up moves as trading began. Record volume was set on Friday. The CME Feeder Cattle Index for October 9 was placed at $100.55/cwt, down $0.30/cwt.

LEAN HOGS on the CME closed up on Monday except for the OCT’08LH futures. The OCT’08LH contract closed at $65.975/cwt, off $0.025/cwt and $0.500/cwt lower than last Monday. The October contract expires on Tuesday. DEC’08 futures closed up $1.225/cwt at $61.100/cwt; up $1.275cwt from a week ago. Prices were traded higher at times. Better expectations for global economic efforts, oversold conditions, and short covering were supporting factors. Last Friday USDA put the pork carcass cutout at $68.58/cwt, down $0.25/cwt. The latest CME Lean Hog Index was placed at $69.74/cwt, off $0.30/cwt. According to HedgersEdge.com, the average pork plant margin was raised $0.20/head to a positive $4.60/head based on an average buy of $47.13/cwt vs. the average breakeven of $48.87/cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The DEC’08 contract closed at $4.114/bu, up 3.25 ^¢ /bu from Friday but 9.75 ^¢ /bu lower than a week ago. MAR’09 corn futures closed at $4.294/bu; up 3.75 ^¢ /bu but 12.75 ^¢ /bu lower than this time last Monday. Trading limits had expanded to 45.0 ^¢ /bu for Monday’s market. Oversold conditions were supportive amid light volume. Weather conditions were aiding the corn harvest amid slow farmer selling. Cash bids remained firm to steady in the U.S. cornbelt while those in the U.S. Mid-Atlantic States were very weak as elevator operators filled bins late last week. Cash bids on the East coast were running between 30.0 ^¢ /bu – 45.0 ^¢ /bu lower. The market traded the U.S. corn crop at 20% harvested. USDA releases that report on Tuesday at 4:00 p.m. EDT as Monday was a holiday. China reported bumper crop corn numbers for this year’s crop as most of that country’s corn crop has been harvested. Funds bought 4,000 contracts while the CFTC’s Commitment of Traders report showed, as of October 7, large speculators cutting net bull positions by 24,000 lots to 16,570 contracts. Those who have up to 70% of the ’08 crop priced today are in good shape. There may be some upside to this market if the financial markets get straightened out.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up amid a mild, short-covering bounce and good economic news on Monday. NOV’08 soybean futures closed at $9.280/bu, up 18.0 ^¢ /bu; 6.0 ^¢ /bu higher than last Monday. The JAN’09 soybean contract closed at $9.434/bu; up 18.0 ^¢ /bu and 5.0 ^¢ /bu better than a week ago. Oversold conditions were supportive while trading limits expanded to $1.05/bu from Friday’s limit trading. Soybeans had been as much as a dime higher before hedging and fund trading initiating a pull back. Slow farmer selling contributed to steady cash prices in the U.S. Midwest while cash bean prices were 70.0 – 90.0 ^¢ /bu lower across the U.S. Mid-Atlantic States. The market’s crop progress assumptions were that USDA will report the U.S. soybean crop about 40% harvested on Tuesday. Fund buying was estimated at about 3,000 contracts. The CFTC supplement to its Commitment of Traders report as of October 7 had large speculators increasing net bull positions by 2,736 lots to 15,874 contracts. It is good if you have priced 60%-70% of the ’08 crop. Price more if you can catch a bounce in prices.

WHEAT futures in Chicago (CBOT) closed to the upside on Monday. The DEC’08 contract closed at $5.884/bu, up 25.0 ^¢ /bu from last Friday but 6.75 ^¢ /bu lower than a week ago. JULY’09 wheat futures were up 24.25 ^¢ /bu at $6.346/bu; 7.5 ^¢ /bu lower than this time last week. News that Argentina’s ‘08/’09 crop would be down as much as 28% and France trimming its ’08 wheat crop estimates were supportive. Also boosting prices were reports of drought increasing in southern Australia and announcements that Egypt bought 265,000 tonnes (9.7 mi bu) while Jordan would tender to buy 100,000 tonnes (3.7 mi bu), The CFTC Commitment of Traders report showed large speculators increasing net bear positions by 3,000 lots to 40,580 contracts. Hopefully 10%-20% of the ’09 wheat crop has been priced.